Rubicon Project Grows Revenue 62%, Orders Biz Takes Off

Rubicon Project's Q1 revenue grew 62% year over year to $37.2 million, thanks to increases in its mobile and orders business, as well as international expansion.

As CEO Frank Addante stated in previous quarters, Rubicon will benefit from the network effect, as an influx of buyers and sellers on the platform will cause growth to snowball.

In Q1, the orders business was 15% of overall managed revenue, up from 13% in the previous quarter. That includes both non-guaranteed orders (private marketplaces) and guaranteed orders (automated guaranteed).

In the first quarter, it signed up 50 sellers to the guaranteed orders. It also signed on two buy-side partners, DigitasLBi and Amnet. Rubicon said it saw deal commitments for orders in the six- to seven-figure range, further attracting interest from sellers.

As the orders business grows, Rubicon expects the mix shift will cause take rate to decline. Rubicon takes a smaller percentage of a transaction conducted via orders, though the higher CPM means revenue would still increase. Rubicon stated that orders CPMs averaged three times higher than RTB CPMs.

Rubicon acquired intent marketing company Chango for $122 million at the end of the first quarter, with the deal closing in April. The purchase "unlocks exciting growth opportunities and will launch out of [the] gate in Q2," President Greg Raifman said. Rubicon expects that the company will help out the bottom line starting at the end of this year.

On the mobile front, Rubicon has gone the partnership route. Thanks to inMobi, Rubicon now has access to 17,000 apps a month. It has another partnership, a private marketplace with location-based exchange xAd, that will be"important step forward in driving growth for mobile orders," Raifman said.

Rubicon also co-authored the OpenRTB 2.3 standard, which it believes will accelerate mobile native advertising.

Rubicon's leadership jumped to answer a question by an investor about its growth acceleration, in contrast to many ad tech companies' deceleration once they reached a certain size.

"It's a good illustration of dual network effects," CEO Frank Addante said. "You have your typical marketplace effects, as well as the byproduct of those transactions, data. As we process transactions, our algorithms get smarter, they deliver higher revenue for sellers and higher ROI for buyers.

Another investor asked if Rubicon was growing in untapped markets or taking share from other well-recognized exchange players like Google, AppNexus or PubMatic.

"This is a large and growing market. There’s lots of green fields, and we're focused on capturing that first," Addante said. Managed revenue also grows from expanding inventory or spending coming from its existing customer base.

"There are two large exchanges, us and Google. We offer similar components to the tech stack," Addante said. "Google built technology for themselves, then offered it to others. We’ve built our tech for others and for the premium part of the market."

Rubicon's managed revenue, or the total amount flowing through the platform, grew 52% YoY to $197.2 million. That gives the ad tech company a take rate of 18.9%, 1.2% higher than Q1 of last year.

The company reported EBITDA of $4.2 million and earnings of 2 cents per share. Last year, it lost money during the same time period.